Getting Rich: from Zero to Hero in One Blog Post

Hi there. If we haven’t met, my name is Mr. Money Mustache. I’m the freaky financial magician who retired along with a lovely wife at age 30 in order to start a family, as well as start living a great life. We did this on two normal salaries with no lottery winnings or Silicon Valley buyout windfalls, by living what we thought was a wonderful and fulfilling existence. It was only after quitting the rat race that we looked around and realized why we had become financially independent while most people, even with higher incomes, end up stuck needing to work until age 65 or later.

I’m writing this post to use as kind of a permanent “Hello!”, since at any given moment in time, about half of the readers of this blog are pretty new, and casting around wondering where to start on a giant site like this with over 400 published articles. Most people arrive with the same question:

“I hear Mr. Money Mustache writes some useful stuff and many people are building happy, wealthy lives for themselves using his advice”, they are saying, “but I am a busy person. How can he make me rich Right Now!?”

Great question. Let’s begin.

We’ll start with a rant, which links to a bunch of other stuff. You can right-click any of those links and open them in a new tab for later. If you get through every link, you’ll be well-equipped to fix most of your life – just like that.

For almost six years, I’ve been preaching a different brand of financial advice from what you see in the newspapers and magazines. The standard line is that life is hard and expensive, so you should keep your nose to the grindstone, clip coupons, save hard for your kids’ collegeeducations, then tuck any tiny slice of your salary that remains into a 401(k) plan. And pray that nothing goes wrong in the 40 years of career work that it will take to get yourself enough savings to enjoy a brief retirement.

Mr. Money Mustache’s advice? Almost all of that is nonsense: Your current middle-class life is an Exploding Volcano of Wastefulness, and by learning to see the truth in this statement, you will easily be able to cut your expenses in half – leaving you saving half of your income. Or two thirds, or more. Sound like a fantasy? Not to readers of this blog.

What happens when you can save more of your income? As it turns out, spending much less money than you bring in is the way to get rich. The ONLY way.

And the effects are surprising: if you can save 50% of your take-home pay starting at age 20, you’ll be wealthy enough to retire by age 37. If you already have some assets now, you’re even closer than that. If you can save 75%, your working career is only 7 years.

So remember my freaky magician story up in the first paragraph? There was not really any magic – my wife and I just saved about 66% of our pay without really noticing it, and in under ten years we woke up and realized we didn’t have to work for a living any more. Our son was born shortly afterwards, and he’s about to have his eleventh birthday party. And we’re still going strong.

But how can you save so much?

The bottom line is this: by focusing on happiness itself, you can lead a much better life than those who focus on convenience, luxury, and following the lead of the financially illiterate herd that is the TV-ad-absorbing Middle Class of the United States (and other rich countries) today. Happiness comes from many sources, but none of these sources involve car or purse upgrades.

No matter what the herd or the TV set tells you, this is the truth. Far from being a social outcast, this new perspective will make you a hero among your friends. This is not a fringe activity anymore – millions of people are fixing their lives these days. And the earlier you can accept it, the sooner you will be rich.

That should do it – about half of your expenses, gone in one paragraph. Keep going, as many readers do, and you can save closer to 75% of what you make – especially for those with above-average incomes.

But then what do I do with all the money?

You invest it. In stock index funds, in paying off your own house, in rental houses if you are interested in local real estate, and in other sources as you continue to learn about making money work for you. As of 2016, my own retirement income comes from a dead-simple asset allocation: a bunch of index funds at Vanguard and Betterment which pay quarterly dividends.

How long will the money last?

If you can get 25 times your annual spending saved up and working for you, that is enough to live off – forever. Don’t worry about the details – just do the saving for now, and watch as your lifestyle transforms and your worries about safetymelt away. This blog is not so much a financial nuts-and-bolts blog as it is a story about lifestyle and attitude transformation. And believe it or not, your attitude determines your lifetime wealth much more than your knowledge of financial nuts and bolts.

Sorry, I must have clicked enter before my whole comment went through!

I meant to also add that your blog has helped me a lot. I am a relatively new reader and I’m constantly now wondering if it’s better to live a “normal” lifestyle instead of constantly caving into lifestyle temptation/inflation. I’d rather continue with the way life is instead of having to continually feel the need to keep up with others.

Life isn’t all about spending as much money as you can and having all of the latest things.

I agree, life is about much more than stuff. Freedom has little stuff in it’s equation and MMM does a great job helping us see how to get from stuff to freedom. Best wishes as you adjust your lifestyle.

Great overview Mr Money Mustache. I myself have been saving a large portion of my income for the past 6 – 7 years, and put it to work in dividend growth stocks. I never had any debt ( good or bad). I figure in about 5 years or so, I would be able to achieve financial independence.

To me financial independence is the point where my monthly dividend income exceeds my monthly expenses. The beauty of dividend growth stocks is that they provide a stable and growing stream of income, which increases above the rate of inflation, and maintains purchasing power. In addition, dividend income is always positive, even during bear markets, which makes dividend stocks an ideal source of income in retirement. Plus, I would never have to sell my assets when prices are low during the next 40% – 50% bear market, in order to fund my living expenses.

Keep in mind that during a 40% – 50% bear market, the dividends you receive will be cut in half if not more as the companies cut their dividend payouts. Also, if a stock goes down 50%, it will have to come back 100% just for you to break even. Great idea of living off interest, just know that it isn’t a set it and forget it plan. You could be forced out of retirement in a bad year or run the risk of digging so far into your principal that you can’t recover.

Good thing to bring up, Joe – except if you look at the history, that doesn’t seem to happen. Dividends tend to stay much more stable on average, even in the biggest crashes. For example, from a peak of $32 per S&P unit in 2008, dividends dropped to $24 for the great financial crisis (so they were at 75% of peak value), and were back to setting records within just 3 years. 2014 is at $37 so far.

Never get to cozy with your situation. I hold 80,000 shares of Wells Fargo stock, that used to be Wachovia with a great ddividen each quarter. Then he slicing and dicing caught up with banks. If Wells Fargo had not bought Wachovia for a little over $1.00 a share, the sto k would be completdly gone down the tubes. At this time , the stock is climbing but nowhere near what it ws as Wachovia. Glad I was still working then. Am retired now at 73.

The reason to focus on dividends is because they have been historically more stable than capital gains.

You should also have a diversified portfolio. Holding just one stock in a portfolio is just asking for trouble. Holding just one stock doesn’t prove dividend investing is risky – it proves holding one stock is risky.

Joe V: NONE of my dividends were cut in the last bear market (2008) except for the few REITs I owned. The trick is to purchase only 2 to 3 of the biggest corporations in seven to ten industries that produce goods or services that people NEED or will NOT GIVE UP. Most people will not give up using or consuming the following: cell phones subscriptions, water, food, electricity, driving, beer, smoking, insurance, medicines, technology. You follow Warren Buffett’s advice and buy well managed companies that have excellent cash flow to cover their dividends; companies that also have a competitive advantage in the market place and that have market influence in scale. And it’s that simple. But one MUST understand basic human nature (start by looking at yourself and all those around you) and apply that to your choice of dividend paying stocks to purchase. And just keep an eye on cash flow via the easy-to-read corporate reported data inputs at Scottrade or the like. Lastly, when a bear market starts and everyone is panic selling, this is the TIME TO BUY! Buy those top stocks when they get battered down in share price, to catch even high-than-usual dividends, and also enjoy the capital value increase as the stock prices climb back up as time passes and the market recovers, as it ALWAYS does. ALWAYS be a contrarian and never do what the masses do when they panic.

Considering that “dividend growth stocks” are currently paying dividends of about 2% of the stock price, living off of the dividends implies that the current total value of the stocks must be about 50 times current expenditures (including taxes). That is a really big challenge for most people. For example, generating just $30,000 per year in dividend income would require stock holdings valued at $1.5 million.

Hey Carlton, your multiplication is OK, but where did you get that 2% figure?

The entire S&P500 index still pays close to 2%, and that’s certainly not a dividend-oriented chunk of stocks. Exxon pays 3.69 and Microsoft is 2.4% right now, while the Senior Housing REIT (SNH) chugs along at 8%.

I got it from the stated current yield of the Vanguard Dividend Growth mutual fund, which — in contrast to the individual stocks that you cite — has an appropriately diversified selection of stocks with a record and future expectation of growth in dividends (but which, on a total return basis — which is what really matters — may or may not out-perform other classes of stocks). That Vanguard fund also — very importantly — has a very low expense ratio that means only very modest reductions in the returns that investors will receive from the dividends paid by the stocks held by the fund.

Mr. Money MustacheDecember 2, 2017, 7:34 pm

Ahh, got it – thanks. How interesting that the dividend fund has only a minimally higher dividend yield than the everything fund. I wonder how that fund overlaps with the “Dividend Aristocrats” collection of stocks, profiled in another one of the articles on this blog.

Either way, it’s a time of low yields and high valuations, so in all cases you’d want a slightly bigger safety margin if making the decision to retire right now, based on the sticker price of a stock portfolio.

After applying what I learned from reading MMM’s “All The Posts Since The Beginning of Time”, I reduced my annual core budget from $24,000 to $18,000. That 25% reduction in my daily expenses made it possible for me to move up my retirement by 3 years. And now… I am free!

It’s been a little less than a year and a half since I posted the above comment. In that time, I’ve been able to drive my basic living expenses down another $3200 a year! I’m now at less than $15,000 and shooting for another 10% reduction by the end of 2015.

Frugality without sacrifice plus budget optimization are the tools helping me to squeeze more and more out of money and out of life.

I found the article interesting, but I doubt it applies to everyone. It is very important to define what personal life goals are and live life/spend money accordingly. Clearly living frugally when in debt is a no brainer. Otherwise, save at every step of life and retire early to do what exactly? Save more money along the way?
I used to be in this mind set in the beginning, trying to save at everything. Now that we have no debt (there is mortgage, but for strategic reasons), make good income and save about 50% of pre-tax income, I am not sure of the merit of saving more. I am also becoming more aware that death is only a moment away (for anyone) and that extra saved money is not of much use when dead.
Don’t get me wrong, we still cannot get ourselves to buy anything not on sale and think of the cost on virtually everything before we spend. Both our kids go to public school, our son just started college on an academic full ride. All this saves money. Part of that is genetic, we are Indian and as a stereotype, very value conscious (some call cheap, but that’s OK). There it is, value vs. cheap. For instance I drive a very expensive car (it will not even get to MMM not recommended list), but spent months haggling on the best deal I could get. I was clear what I wanted and waited and got the best deal. Obviously it was something we could afford, otherwise it would not be even an option.

Having said all this, I more than agree that a lot of money we spend does not give happiness and that should be the focus. Those suggestions are good irrespective of whether they save money or not.

I guess after this long rant, my point is after saving a good percentage (50% in my mind), and staying free of debt, there is no incremental value in saving more while spending away valuable life years.

Hi Ravi,
I’d love to learn how you haggled to get a great deal on an expensive car. We are about 2 years away from buying a nonmustachian type car because it’s a compromise I had to make with my husband. I prefer a MMM type car but since my hubby ain’t having it, I would like to know how to get the best deal on the type of car he wants. Any tips or pointers would be appreciated!

Haggling tips for good cars are best explained in the book ‘The Millionaire Next Door’. I would also add that you should look all over for your vehicles and be prepared to walk away. That’s how we got almost 15% off our last car from it’s sticker price (And ours was a particularly cheap one, so that represented a big chunk of their profits, I would imagine. £1000 off sticker and things thrown in like an MOT (A mandatory annual test that cars must have in order to be taxed/insured in the UK (Aprox £150-200)), car tax for the year and other things of that nature adding up to some £200 or so.

So, this advice is probably coming a bit late, but here are a few things to recommend.

1. Go into the store to shop, not to buy. Check out the cars you are interested, test drive them. Don’t do anything else.

2. Once you have a short list of cars 2-4 models and the desired trim levels, start emailing delerships. As many as you can in as wide an area as you can stand.

3. Go back and forth, let people know what the best deals you are finding are, and see if they can beet it. The best way to know you have made it as far as possible is when they start accusing you of making up your prices :) [For the record, don’t do this, it won’t get you anywhere.]

4. When you have the BEST price for the cars you want, start going into dealerships again and talk financing. Every time I buy I go in planning to pay 100% cash for the car. Both times I have instead found 0% financing deals that ended up giving me $500-$1500 off the price of the car.

5. Never be afraid to walk away. Both recent car purchases were proceeded with 2-3 walkouts. These don’t need to be rude, or dramatic, just don’t be pressured. Walking out isn’t gong to get you a good deal, but it will lead you to a salesperson who cares enough about the sale to make it happen.

6. Time the market. DON’T buy a 2018 in Sept 2017, much better to buy a 2017 in Dec 2017.

Ok, there are tons of other things to keep in mind, but the whole emailing and shopping around processes has proven to work very well for me. Both of the cars I bought had MSRP of under 25k, so I can’t promise these steps will translate 1:1 with a luxury car purchase, but getting a sizable discount on a new car with 0% financing and a solid warranty is worth a shot.

I do agree with your views. It is commendable that you are able to save 50% of your income! I am Indian too but not stereotypical! I did have debt. I thought was the norm and the only way to live as that is what I learnt from living in NA . The value/cheap journey is something I have started recently and I hope to be in your position someday. We now have only mortgage debt (substantial, we live in Toronto) but saving 50% seems very distant. I don’t know if we will get there.
I think saving over 50% allows one to retire sooner to pursue a life where one can pursue work or interests on their own terms. This of course is not relevant if your current job is your passion.

Love your comment! So on point! I used to be super cheap, buying only items that are about to expire, never traveled, never went out, buy the cheapest clothes. Now I am trying to figure out what brings pleasure and what experiences are worth paying money for. If you have a family of 6, and struggling paying your rent, then sure, eating rice and beans is something you have to do. But if you enjoy cooking and trying out different recipes brings you joy, why not spend a little bit more? That can be an experience by itself.

I think life is not much about retiring early, but more about enjoying what you do. If you love your job, then why would you quit that? You can always negotiate less hours, but not to work completely is weird, if you thrive at work and love challenging yourself.

“This blog is not so much a financial nuts-and-bolts blog as it is a story about lifestyle and attitude transformation. And believe it or not, your attitude determines your lifetime wealth much more than your knowledge of financial nuts and bolts.”

This about sums it all up. We’re not even close to living a Mustachian lifestyle, but you’re slowly changing the way we look at life, money, and happiness. In fact, you’re responsible for a two-hour “what are we living for” session last week. So we’re warming up to lifestyle changes to make a better life possible.

Johnny, I am looking to have a “what are we living for” session with my wife as we currently live an unsustainable lifestyle. I would love to hear more about your session – what topics did you cover? did you have a plan going in? I am thinking of putting together a excel spreadsheet to annualise our expenses and the effect they will have on our retirement age.

I think I have a new link to send out when my friends ask: Who is this “Mr Money Mustache”? For a long time I’m been sending out “What do you mean you don’t have a Bike?” and the “Is in convenient, Would I enjoy it?” but I think this post encapsulates all the goods into one post.

I just have to wonder, is this the outline for the soon to published book: Mr Money Mustache’s Guide to Life and Money?

That was my first thought. I have a couple of favourite posts I send to people as an intro … but I usually just tell them the site name and recommend that they push the random article button four or five times. If they just do that, I believe that due to the cosmic goodness of the MMM universe, they will find something that resonates for them.

I got a real big punch of “I don’t want to work here anymore” with office politics this week, so it’s making the fires of “I want early retirement” burn even hotter.
Have fun in the Seattle area! While you’re off having fun and snowboarding, can Mrs. MM perhaps write a blog post? I like hearing from her too and it’s been a while.

I love your “I got a real big punch of ‘I don’t want to work here anymore’ with office politics this week”. But think of it this way – they have done you a FAVOR to light your I WANT early retirement fires!

I could not agree with this more. I only started to research and understand retirement savings and personal finance when I went through a rough patch at my job ( I was given an impossible task and then wasn’t sucessful, it was so frustrating). Even though the failure was heartbreaking, it made me reevaluate my life and goals, and instantly start mega-funding a 403b. I finally understand that every dollar I save today buys me time in my future. Thank you so much, MMM.

I think one of the biggest things I have taken away from your blog is to ask myself would this purchase, item or experience really make me happier. On top of that I think you really make people examine how our society allows people to be wasteful without a second thought. I am definitely glad I found your blog a.few months ago and new readers have a lot they can learn.

“I think one of the biggest things I have taken away from your blog is to ask myself would this purchase, item or experience really make me happier.”

Yeah, exactly! I think it that may be the MOST important thing to learn. People think new cars and massive TVs make them happy, but they really don’t. Its about our relationships and the time we spend with others.

Even though I’ve only been here for about 2 weeks now, I’m trying to become a sponge but information has been leaking out because of my tendency to speed read and the vast amounts of information. This post was incredibly useful for any newcomers in that it really does get down the the nitty gritty of financial independence. It also reminded me of those posts that really stuck out to me while I was reading and that I forgot to bookmark :s. I can’t wait until I can get out into the ocean of jobs and start saving my ‘Stash!

THis post really gets the juices flowing towards cutting expenses, now I have to convince the mrs. that we should cut the cable service. Since the first post I read I have respected what this blog is about and how it can help others win at life.

Cut cable and you won’t regret it! We did a few years ago and haven’t regretted it since. You get get a Roku box off of Amazon.com (or maybe even a used one) then get Netflix for only $7.99 a month. It is awesome if you have kids because all of the popular cartoons are on it and easily accessible. We also have Hulu (it’s also $7.99 per month) but we are probably going to cancel it because we don’t use it anymore.

+2
I used to fret over cutting cable. I have been without it for a little over a year now. Left my previous job (huge time sink) and started my own business. I may not be saving as much as I would like yet, but it has been a nice exercise on cutting costs during the start up time. I am as happy now as I have been in years. Stress is good, more time with kids.

Oh yeah, when you cut cable/sat., you hear less of “Dad, can I get the new [insert new toy]” Kids are not pumped full of ads for more crap.

The other benefit of living on less is that if things ever got really bad with this economy, you have already transitioned into a more self-reliant person/family.

We cut cable over 7 years ago and haven’t regretted it 1 minute! We would so much rather be playing outside or reading something (like a blog….ha!) than staring at the television. As a reminder, we babysat my niece’s baby last night and watched their cable t.v. We grew more and more frustrated at a commercial every 2 minutes! Plus out of several hundred channels, we really didn’t find anything we were interested in. Guess it’s been too long since we had cable. We watch a lot of public t.v. and I watch a couple of shows on abc/nbc. Other than that-we’ve got better things to do! :-) Yay for anyone that cuts $70 or whatever it is per month for cable!

Actually, 2 years in the USA made us cut the cable in 2005 (we are originally from Europe), probably the best outcome of having been there (in Texas….). We were physically sick of that fear-mongering TV in USA, the repeating Ads, the shouting, the mindless talks, it was just too much sickness. Now we have been free for 9 years, and never looked back. Thanks USA for this great experience!

Another plug for the Roku, if you have an Amazon Prime membership, you get access to their instant streaming as well. You can pay to rent movies from the Roku, but with all the free (and awesome) content on there you shouldn’t bother. AND, the rotate their free content for Prime members pretty regularly so their is always something new.

Note: Amazone Prime is like $70/year but you get 2-day free shipping on all prime purchases (this is how I shop for pretty much anything I need from groceries to household items), and there is a free kindle lending library that also rocks!

We live in a rural area with slowish internet, so streaming is not amazing. However, last fall we purchased an older model of tivo box and love it. I didn’t grow up with much tv, but at my husband’s house it was always on, so this has been a good compromise. It was really exciting to get rid of one of our bills!

So, can I get PBS, HGTV, Discovery & HBO programming on any of these services? Those are the channels we watch most (other than kiddy stuff sometimes). That is what stops me from cutting cable entirely. Also, when friends visit your house and want to watch some sports, does streaming work?

I’m able to plug both my iPad and PC with HDMI cable into my TV – streamming HGTV, Discovery Channel, History Channel, Animal Planet, and many, many, many others for FREE direct (legal) from the content providers… The cable for my iPad cost $30. The PC, which is the size of a cable modem and has a fantastic NVIDIA graphics chip, wireless keyboard, and mouse, cost me about $300 (new) three years ago. Get HiDef free TV from my 30 year old antenna. Couldn’t be happier.

Or… you could cut cable and NOT get a Roku or Netflix. Spend your time listening to free podcasts, cooking delicious dinners, playing outside, biking, doing yoga, exercising, having friends over, reading, baking, or doing any manner of free things. There are so many free ways to have fun that don’t involve staring at a screen. Also, most TV shows nowadays post recent episodes online so you can keep up with shows you like that way for free! Also, Redbox is a super easy way to rent DVDs for cheap, although I admit that sometimes the selection is lacking.

Yes! But if you desire stimulation go to the library and order Game of Thrones for free! I watched the entire series that way. I also enjoy getting the Great Courses and any documentary I desire through Interlibrary loan.

Dangit! I can’t make it to the meetup. :( But if MMM is snowboarding where I am guessing he might be, which is the premier locale for it, he’ll be in my neck of the woods and there is some pretty fantastic beer here as well. (E-mail incoming!)

Was a good turn out. Just happened to be in EBB at the time the event was going on. Unfortunately did not get to participate as was only there for short time and appeared to be quite a crowd. Very nice that MMM took the time to greet his readers, and friends. In this area there are many like minded folks as the voluntary simplicity movement had its origins here with Vicki and Joe. Keep up,the good work!!

My boyfriend is currently enjoying some semi-retirement. He has his own company and has reserved the first three to four months of this year for tinkering&inventing. He can do this because he made a lot of money over the last few years and saved most of it. Maybe his invention will be sold, maybe after a few months he has to admit it’s not working. But that’s both okay. His savings will last him several years if need be, but probably new jobs will come to him whenever he is done inventing.

He loves that he has this option!

Meanwhile I’m working hard, about ten years to retirement for me (I’m 34 now). (And yea, I’m a bit jealous of him).

I’m glad you pointed out the end goal of happiness. I’ve been trying to wrap my head around what it takes to truly be happy. There are so many different opinions about what happiness means that we tend to just resign to the fact that it depends on the person. Bull!

Recently, I’ve bought into the concepts of the Self-Determination Theory. It states that after we fulfill our basic needs there are three innate psychological needs: competence, relatedness, and autonomy. If these three are satisfied, we experience what we call happiness. As it turns out, retirement or financial independence is the perfect way to satisfy the need for autonomy. If we no longer have to work for a paycheck, we suddenly have more time to pursue other options. People who have options are happier, and those that have infinite choices are truly content. Autonomy!

Even your advice about DIY repairs and bicycling instead of driving has a direct contribution to the need for competence. I’ve almost completely bought into this theory because it just makes so much sense. Notice how there is no mention of extrinsic aspirations like being rich, prestige, or having nice things.

This is an awesome overview! Everything in one post for new folks. I already recommended this post to a friend of mine who recently started reading this blog. This post might make it easier to get a grasp of the overall MMM lifestyle and spending more quickly.

An Excellent punch in the arm, sir. (The unbruised one, if you please).
What’s amazing to me is that, even though I was thought we were so smart with our purchasing patterns, there’s always some leaky little spot somewhere that this blog manages to find.
I would like to point out a minor grammatical error, however. Shouldn’t it be an “Exploding Volcano of Wastefulness”? It doesn’t look right with all those lowercase letters.

I like the Mr. Money Mustache way. There seems to be a few formulas that are out there for people to become financially independent. The first is the old fashioned work, max out your 401k, contribute to a Roth, do this until you’re 65 years old and maybe, just maybe you can retire. Then there are the total minimalist, make your own laundry detergent, live in a cardboard box or in a rental with 6 other people types.

MMM is for ANY person who wants to live a full life without the anchor of consumerism or dependency upon others for their own financial success. His philosophy is as much for the 40 something single parent who realizes his/her financial future is not heading in the right direction as well as the 20 year old couple starting out. You don’t have to sacrifice happiness, you just have to change a few things to get you to financial independence.

Example: I “needed” an inversion table after trying one out in one of those “back” stores. I felt my spine ease into alignment and it was wonderful. I went home and researched a popular brand and was thinking about hitting the PayPal button when I suddenly took MMM’s advise and punched myself in the face several times. I then clicked on Craigslist and found of the same super-deluxe model for $125. The ad said it was brand new. I called and asked if the price was firm. It was negotiable. I went to the sellers home and she hit the garage button to reveal a floor to ceiling warehouse of a garage filled with things she and her husband had bought but apparently never used. The inversion table was there with the manufacturer tags still on it. It was indeed new. I walked away with it for $80, a full $500 less than the one I punched myself in the face over. I use that inversion table every night. If I over get rid of it, I’m sure I can sell it at a profit.

That’s only one of the many magical Mr. Money Mustache magnificent moves.

May I also gently suggest trying yoga? It’s incredibly good for the back and the principles of the practice apply very nicely to to anti-consumerism. No fancy equipment or clothes (some yogis practice virtually naked), just postures and deep breathing. My tough-guy husband (grew up in an mining town in Montana) essentially crawled to my yoga class and has never looked back.

More like compulsive shoppers, the ones who get their kicks from the act of buying stuff. I have neighbors close to that, though they do tend to use things a few times before relegating them to the garage.

I used to go to the chiropractor every few weeks for lower back soreness and issues. After switching to (almost) all real food, losing some weight and exercising 5x per week, I haven’t had a sore back since! Fitness Blender is where I get all my free videos now. I got tired of listening to Jillian Michaels after 3 years.

I recently found this site and I am thoroughly enjoying reading it! Saving for the future rather than buying today has been my personal philosophy for my entire life. (I gave my allowance to my dad to put in the bank when I was 5 – 6 years old.)
Many of my clients earn well into the six figures and have no emergency savings. They have no idea where their money is going and they often have accumulated credit card debt. Living in an expensive area such as NY/Metro area does not help. Which often is the excuse. It is a real challenge to get them to understand the simple math of simplifying and modifying their lifestyle will allow them to save. (Of course this only works when both spouses agree. This is whole other story).

Great summary! We are currently in the “live happy on less” camp and it definitely works. I have actually found that I am happier and more content with fewer things and a less complicated life in general. I look forward to the day when we have built up enough wealth for us to walk away from our jobs completely as you have. We’re not there yet, but we’re working on it!

As someone on his own path to financial independence, I would agree with most of what MMM stated above. I don’t agree with all of MMM’s suggestions, some are too extreme for me and some are unworkable given my current situation. But on the basic points and underlying math, we agree.

I would offer the following advice to people starting down the road to Financial Independence.

– Small changes add up. So start making your own lunch or brewing your own coffee.
– If you aren’t willing to move something across country, you probably shouldn’t buy it in the first place.
– Spend money on things that make you happy, just make sure that those things are clearly defined.
– Cancel cable TV. Really. It’s a phenomenal waste.
– Minimize lifestyle inflation. When I moved from post-doc to real job, I kept my standard of living about the same. All the extra money is being banked.
– Unless you’re gifted with a massive salary, being an extreme saver is going to involve trade offs. Use your judgement about the best way to spend your money.

> – Minimize lifestyle inflation. When I moved from post-doc to real job, I kept my standard of living about the same. All the extra money is being banked.

This is the huge one. I currently live like a student, and bank the rest of my salary, which puts me on track to retire in 5 years. And I *like* living like a student; the vast majority of the things I enjoy doing involve stuff I already own and rarely need to change.

I started reading the MMM blog a couple months ago and have finally caught up to the most recent post. I loved reading from the beginning and have very much appreciated MMM’s attitude and wisdom. I actually have a Masters in Economics and a lot of the concepts in the blogs come quite naturally to me. However, I struggle with believing that financial independence is a realistic option in the near future. My salary is decent but my career has been defined by working for the Canadian federal government where so much of my paycheck disappers towards taxes, pension contributions, benefits, etc… I do not know many places in Canada where a ‘normal’ salary is six figures and houses do not start at half a million dollars. Thanks to MMM, I sense myself developing a taste for a life that I never gave enough thought to and I realize that my main limitations are self-imposed.

Had I kept my old job, financial independence before traditional retirement age wouldn’t have been very feasible. $40K per year is not a lot of money. The traditional early retirement/early FI answer is live in squalor or like a college student in order to hit a 50% savings rate.

In that case you really have to think hard whether the lifestyle hit is worth early retirement / FI.

On the bright side, given my 20-30% savings rate at the time, I would have able to retire comfortably, while most people making the same salary and saving sub 5% would have had to downsize an already meager lifestyle for retirement.

“live in squalor or like a college student in order to hit a 50% savings rate” – 50% of $40k? There are plenty of cities in the US with good public transit in which one can live well (IMO – includes subscriptions to publications and a fancy gym with hot tubs and whatnot) for under $20k and paying a net $2500 in taxes after maxing out retirement accounts, HSAs, and using pre-tax money for a commute to work on the bus if necessary.

I would be curious as to where you’re living. When I think of good public transportation in the US, I think about SF, DC, or NYC. All of which are egregiously expensive to live in.

Where I lived previously had passable public transportation if you didn’t mind waiting 40-60 minutes for a bus. And the bus system was functional on less days than banks are. You could get a cheap apartment there (400-500/month) if you were willing to get a bunch of roommates, who would have all been college students. Complete with excessive drinking and late night parties. Not squalor, but not living like a respectable adult who has a job to hold down.

What’s all this nonsense about “public transportation”? That’s a nice thing and I support it fully, but now that BIKES have been invented, you can reach a similar swath of a metro area without the nonsense of conforming to bus schedules and driver strikes.

As for the roommates/squalor complaints: sure, if you pick frat boys as roommates, that’s how you will live. Or you can use your social skills, meet some people you LIKE, and team up for a fantastic living experience.

I lived in seven different houses-with-roommates between the ages of 18-25 (as salary climbed gradually from $0 to $78,000/year). They were all a blast, and finally at the end I felt I had saved enough to afford a non-shared house. But I still miss the good times.

Quality of roommates can vary a lot by age/location. If you are under 25, I would say it is usually not too much trouble to find good roommates–they are mostly in your age bracket and therefore you seem like a nice, normal person like them. As you get older, the younger crowd (who make up the majority of the potential roommate pool) will view you with more and more suspicion (“why exactly does this 40 year old not have their shit together enough to get their own place??”) and are less likely to want to room with you. People your own age have partnered off and therefore also don’t particularly want you as a roommate. You ultimately are left with less and less room to be choosy. I experienced this myself recently. I had roommates in my early 20s and finding a place to live and people I got on with was never a problem. Then I lived on my own for a while. Then I got a job in a more expensive area and jumped back into the roommate search at age 30 and it was a LOT harder, mainly (I think) because I was no longer “just like” many of the potential roommates. Also, I found my BS meter had gotten a lot more sensitive. And, if your roommates are not of a frugal mindset like you are, that can cause issues too (i.e., you don’t want to pay $50/month for “your share” of the cable TV you never watch, and so on).

Anyway, in my opinion there is nothing inherently wrong with roommates, but I would not depend on them as a long term solution to housing costs unless you are going to be the landlord (b/c then it’s your place and you can make all the rules!).

All my roommates except my current one have been college students, but none of them were partiers or binge drinkers. Admittedly, I’ve been doing it the luxurious way since I got out of the dorm: I’ve had only one housemate at a time and we each had our own rooms. It also helps to have the rule of no TV in the living room except for special occasions.

Some have been whiners or kind of boring–I find I spend more time in outside-the-house activities at those times. Others have been great fun. Half my recipes are from ex-roommates plus they’ve taught me nice things like how cool rubber spatulas are and what a good idea it is to keep a pair of scissors in the kitchen.

I’ve only been lucky enough to live on 40K the past couple of years. (After a big raise about 7 years ago, my salary caught up to that of first-year teachers and it’s been neck-and-neck ever since!)

It’s true that most people writing personal finance blogs make pretty big bucks (you can always tell when, for example, Americans give examples involving being in the 25% or even 28% tax bracket).

I live in a city of medium expensiveness and therefore crappy mass-transit, but I work at a college and live fairly close to it, so I can take the shuttle in. (I’ve tried riding my bike, but I prefer the extra reading time.)

Admittedly, I still don’t save 50%–more like 30%. I realized I value locational independence (car ownership) as well as financial independence, for example. And I insist on living in a state with high property taxes (I love my college town), so paying off my house was not quite as exciting as it could have been. The point is that we shouldn’t spend a lot of bucks for stuff that isn’t even contributing (or contributing enough) to our overall happiness.

You forgot Chicago. I have lived happily carless in Chicago for over 25 years. And, contrary to what you’ve heard, the north side of the city is extremely safe and very affordable… if you avoid the “trendy” near north lakefront zip codes. This city has GREAT public transit, and my life has been easier and much more comfortable without dragging around a 3000 lb. piece of bling to attract parking tickets, repair bills, and vandals.

I made a conscious decision to become more frugal years ago and turned my back on “yuppie” striving for evermore designer handbags and overpriced housing in trendy neighborhoods and $50,000 cars, when I arrived at middle age stone-broke with nothing but a closet full of dated “designer” clothes to show for working 10 hours a day in high-pressure jobs.

Now, I pay cash for everything, including a lovely condo in a very nice and safe, but distinctly unfashionable far north Chicago neighborhood. I buy used furniture and get beautiful furniture for next to nothing from Craigslist, that I could never afford new. I buy used clothing. I no longer crave to stuff my dwelling with “bling” that will end up in a landfill 5 years later. I walk a great deal or use public transit, and if I have real need of an auto, I use the car-share services like ZipCars or IGo. I buy used clothing in classic styles and dark colors, and very little of that. Bought a gorgeous, perfect camel-hair coat for $35, will most likely keep it for life.

Life is now about enjoying my loved ones and friends, and savoring the beauty of my city and neighborhood. A long walk around here in the spring, enjoying the beauty of the trees and flowers and animals, and the great architecture, is my favorite entertainment. This city is also full of urban amenities available for free or very low cost- the library, the beautiful parks, the beaches, the bike trails. The museums all have “free”days for citizens.

I agree, there are deals to be had in major cities, if you know where to look! I lived in Chicago about ten years ago in a huge loft in the West Loop with a gorgeous city view and a deck we could barbecue on for only $900 a month! My husband and I were living an amazing lifestyle on relatively little money, we’d go to gallery openings, bike trips on the lakefront, the beach in the summer…cities don’t have to be that expensive (maybe Manhattan or San Fran are the exceptions, but I think one can be creative and perhaps lucky anywhere)!

A fellow government worker! I’m provincial, but same deal. I wouldn’t consider a six-figure salary ‘normal’ either, particularly with less than ten years of experience under your belt, but of course it depends on your field. And unfortunately for us gov’t workers people are always campaigning for us to make less. ;) Still, according to my calculations I can retire at 37, or if I were single with single income, 42 – may not be MMM’s schedule, but a far cry from the traditional 65 or even ‘freedom 55’ that most people think is manageable!

Not sure if youre in canada or the US but I work for the BC prov gov and we have an awesome thing called “deferred salary leave”. You can put away between 10 and 33% of your pretax income for a period of time set by you and then take 3-12 months off and have that savings pay you in your absence (job will be held for up to 12 mos). Its a great tax haven that really doesnt ever catch up with you. I put 1/3 of my income away under this program for 2 yrs and then took the third year off with the same pay. Deduction rates go down as they are based on you income after the decduction- WIN! I travelled the world for a year (rented out my house so i could pay my mortage) and im saving a again for a 9 month leave to go on a US road trip and live in the caribbean for the winter to dive. The “man” doesnt tell you about these benefits- you have to dig for them but a lot of the Prov govs have them….

I know you don’t watch tv, but you need to watch the last 2 minutes of last night’s Parks & Rec. Go to Hulu, sit through one commercial, and then click on the 21:15 mark. It’s a character describing how he made a last minute wedding ring. Trust me…he’s clearly a mustachian!

I think the most important thing is to avoid debt and lifestyle inflation.
Debt is easily avoidable and unnecessary in 99% of cases. Avoiding lifestyle inflation can be more difficult than it sounds because of various societal pressures that encourage you to take the ‘next step’ and buy a car, a house and lots of other generally unnecessary things. You just have to learn to resist!
If you maintain that student lifestyle and only gradually make incremental increases, and only to the areas of your life that are really important to you and align with your vales, it’s really not that hard to save upwards of 50% of your income.

I think a lot of people don’t know what makes them happy. If going out to eat is a big source of your happiness, then I would be curious why that is.

We have people over to our house for dinner a lot and are invited to the homes of friends for dinner just as often. Our kids run around and play, we eat, drink, and are merry. We have interesting discussions, sometimes get tipsy, and often stay up much too late for the kids. It is so much fun.

I can’t imagine a better evening. This is what we do instead of going out to eat. This typically happens at least once a week. All the people that we hang out with tend to live within a short walk or bike ride of our house, as we’ve met a lot of great families in our community. Being an active part of the community in this way and having close friends and meaningful relationships is important to me – that’s what makes me happy.

When you add in a picky eater (our son) and my gluten-intolerance, eating at home (or with friends) makes a lot more sense.

Generally, where you’re spending money, there are other ways to do things that can bring about more happiness. Plus, MMM makes everything fun around here. Cooking dinner together usually involves music and many dancing interludes when our son decides he likes a song and turns up the music.

I don’t miss going out to eat at all. That $225 consists mostly of sushi and indian food lunch dates that MMM and I go on while our son is at school, plus occasional coffee outing with my girlfriends.

Have you guys watched a documentary called “Happy”? There is a Danish woman and her children who live in a communal house. There were so many families living there that each family was assigned to cook for everyone one day out of the month (my memory is cloudy but it was something like that). They all ate together every night. It just looked like a lot of fun. Anyways, your story about dinners and cooking reminded me of that.

On a 16-person ski trip, our group did just that. Teams were assigned cooking and cleaning duties each day. That made eating in a lot of fun.

My wife and I value going out to eat quite a bit. Neither one of us are great cooks, It gives us a change of scenery, and I personally enjoy the ability to choose something to eat amongst many choices (I am a picky eater). We have cut back on eating out, but I wouldn’t want to forgo or nearly forgo the pleasure we get from the experience. I would add that a lot of people who eat out a lot tend to having problems controlling their weight and may have other health issues- so that is another reason to really cut back. This is a concern for us, but my wife and I practice healthy eating when we eat out- and we pick places where we know the menus and can order healthy options that we would have trouble making on our own.

I think as stated above, you need to choose what areas bring you happiness and which don’t. For some it may be eating out, or for others it could be cable tv/live sports, etc. If you were to look at our budget eating out is one of the few areas where we splurge otherwise we save a significant portion of our income (over 50%). There are enough other areas where we cut that there is still room to live a mustachian lifestyle and indulge in one or two select extravagences if it is important enough to you. If our income/net worth put us more in the “starting out” phase we would probably cut back more- but we’ve been saving and building our stache for 10+ years.

Mrs. MMM has a good idea eating with friends as a source of good entertainment that can get you out of the house. It doesn’t work quite as well due to our little picky desires (I don’t eat red meat for example- that stuff and fried foods/highly processed foods will kill you if you consume it regularly). So that makes it tough, but on the other hand, she has a gluten-intolerance, so their friends must be nice enough to accomodate. The restaurant doesn’t care- they’ll serve you if you bring your wallet!

I think variety is what makes life fun. I love the nights where we all cook together and then play boardgames afterwards. But I love going out and experiencing a great meal without having to clean up afterwards just as much.

Living in NYC is great in that there is an abundance of amazing food from all over the world. From ethnic food trucks to high-end dining, it seems a shame not to experience it when it is just at your doorstep.

For me retirement is about experiencing life. Food is just one of my many interests.

Yeah, I think it depends on what your goals are. If you’re struggling to make ends meet (or have credit card debts, etc), then not eating out is a great way to save money. Not only that, but it will usually be better for your health as well. It’s good for people that feel they are “missing out” on eating out to know that there are other fun options as well.

As you know, we are retired, but choose not to eat out. I used to eat out a lot more when I was younger, but now with a kid and our my diet issues, it’s just a lot easier (and more fun, for us) to stay in. I don’t miss it at all. When I do go eat out, it is way more fun now too.

However, I do spend $120 per month on a crossfit membership… MMM doesn’t have one, but for me, I think it is worthwhile (after much trial and error). Would I have a crossfit membership if I was struggling with debt? No way!

Generally, I will always put health, fitness, and the environment ahead of anything else when making spending decisions. Eating out doesn’t really fit in here, except for the occasional bike ride to a restaurant with MMM on a nice warm summer day. For fitness, I happen to enjoy an expensive sport (crossfit), but I also enjoy cheap ones like biking and hiking.

Also note, I would not go to crossfit if I had to drive to another town to do it. I can easily bike there within 5 minutes year round, so that plays a huge role.

Like anything, all this stuff happens over time and it depends on what you’re hoping to achieve. At this point, MMM and I could choose to spend more, but we don’t. The reason we don’t is that we already feel like we’re as happy as could be and doing everything we could possibly want to do. It happens to cost $25K per year for our family (with no mortgage).

Everyone is unique, but I do think that the general exercise of going without something is useful to everyone. Just like a “cleanse diet” like a lot of people do. Try it and see what happens. It may just change your mind… and your life.

“without having to clean up afterwards just as much” – sounds a bit like scenarios leading to the catheter / bedpan in the 09/18/2012 article.

“it seems a shame not to experience it when it is just at your doorstep” – I personally felt the same pull when I first moved to NYC, and definitely used my spending money on a very fancy meal every now and then (relative to the rest of the US, IMO NYC places offer a great value for the price).

But cooking ended up being more convenient in my case, and was much easier and more rewarding than I had imagined it would be for me =)

Mrs. MM – thanks for clarifying how your eating out budget is spent. As hinted in the “Quitting a Cash Cow Job” article (see last comment), your comments play a critical role in showing females that early retirement is possible and fun without spending a fortune.

I think it would be great for more of that sort of detail. Having readers see exactly what the monthly food budget buys, for example, would help open some eyes to how you can actually eat well and entertain guests on a budget of $80/week. Especially when organic items are included.

Other ideas might be along the lines of how the family entertained itself for free or dirt cheap in any given month.

Anyway, another great post from MMM. A summary at this stage was a brilliant idea.

But yeah, we eat well and healthy and we eat all our meals at home too (for the most part) – breakfast, lunch, and dinner. MMM does almost all the grocery shopping, so he works his magic there.

Free entertainment is pretty easy: bike rides, hiking, visiting friends, parks, the library, the museum, the rec center for swimming, playing soccer, making snowforts, gardening, reading, watching movies at home, writing books, playing board games, making crafts… I mean the list goes on and on. Having a kid will keep you pretty active and entertained too. We hardly ever spend money just to have fun! :)

Mrs MM I second that point, we used to eat out a lot but we’re finding it WAY more fun to have friends over. The key is to prepare a meal ahead of time, throw it in the oven and voila instant meal minimal stress.

Today for example we had friends for late lunch, than after they left we popped out to visit some other friends. Since they have 4 kids I picked up some cheap snacks for them, choc covered wafels, terribly unhealthy but oh boy did they make the kids day. Cost me all of a €

Mrs.MM I completely agree I think some people don’t ask why something makes them happy, so they just attribute it to the surface experience even though most of the time it’s more then that. I really appreciate when you stop by and put your own comments in the blog. It gives a different perspective and you include more exact detailed examples, which as mentioned is great. I also understand that food is this couples enjoyment but as stuff changes that might change. For example my do not sacrifice area is travel but by reading thus blog I’ve already come to the realization that might change
Like how it’s been explained by your lower travel because you don’t have to travel to de stress or the fact that there is lots of new things to explore locally. I think it would be great if we heard from you more often and even though I already move past some of the older posts you should see if there is any other insight you could add to older ones.. Cool laters

I hate cooking although I am pretty good at it. As I don’t mind eating same dish several times per week so I have started cooking on sundays three or four dishes that last me the rest of the week for lunches and dinners. I do it eat at restaurants during vacations and when I am meeting friends. It enables me to eat healthier and gives me more free time during the weeks to focus on training etc.

I hate eating at restaurants – having to get there, wait around, eat food that is no better than what I can cook at home and often worse, then paying an exorbitant amount. I much prefer what Mrs. MMM describes – having a fun evening at home with friends in a relaxed atmosphere.

You sound like you live a little too close to Convenience Land. Years ago, my wife and I lived in a major city and always tried the newest restaurant or went to movies on a regular basis. Moving to a suburb that’s about 25 miles away has saved us a fortune! The town we live in now has nothing to do as far as entertainment goes so we started cooking more at home and reading more. Plus our property taxes are about 20% what they were in the city. Win-win!

But I will say that I only eat at established restaurants, as I get really upset when I spend good money on bad food.

My husband and I do not goto the movies unless it is a 3D movie like The Avengers. But we only goto the movies about once or at most twice a year.

I already cook at home most of the time, but my husband is a bigger foodie than me and as much as he loves my cooking, there are things that I refuse to make at home such anything deep fried for which we have to get at a restaurant.

We love living in NYC. We really enjoy going to all the world-class museums for free and have pretty much been every single one multiple times. We love walking and biking though Central Park. And I particularly love spending time at the NYC public library as it is just so grand.

For me, moving out of downtown, but still in the city helped with that. I’m now about a ten minute walk away from everything. It forces me to think consciously about going out for brunch when I could just make something from scratch! Being out of downtown means that there are grocery stores in that area with restaurants as well, which is awesome!! I’ve cut my eating out down a TON since moving here. Being within walking distance of a grocery store makes such a huge difference.

Me too – my solution is to make lots of whatever I make when I do cook, at least for stuff that freezes well, and when you’re feeling too tired or you’re too busy to cook you can just have leftovers of something. I like to go out for Indian food though because I can’t make it at home to turn out as delicious as a restaurant can. I’ve found a decent butter chicken recipe but am still searching for others… alas. ;) So if anyone has any good Indian recipes (not calling for “curry paste” or “curry powder”!) I’d love to hear ’em! ;)

Sure, I get tired of cooking sometimes – that’s what sandwiches are for, and crock pots, and all those little tubs in fridge & freezer ’cause the wok stir-fries two portions as easily as one. But don’t you get tired of spending time getting to a restaurant, spending time waiting for a table, spending time waiting for the waitron to take your order, spending time waiting for your food, spending time waiting for the bill, spending time waiting for the waitron to bring change/card slip…?

Most people save the money they have “left over” at the end of the month. That’s the worst thing we can do! Saving (or paying off debt- including the mortgage) should come first. That’s one of the biggest keys to financial independence! Great post, as always, Mr. MM!

I don’t agree. I really never made a conscious decision to save X amount, or Y percentage of salary. I just chose to live a life where most of the stuff I wanted was cheap. I actively wanted to exclude a lot of the expensive stuff, not because it was expensive, but because I wanted to not have it in my life. And so savings came almost automatically, and most importantly, I never felt deprived because I wasn’t spending.

We save money twice per month; initially, when we do our monthly budget (what we have left over after funding the needs and a few wants), and again at the end of the month, when we come in under budget in a few areas. Doing this, we consistently save between 65 – 70% of our 80k take-home pay. The initial savings and the leftovers go towards paying off the house, which will be paid off by Feb. 2017 (12 years to pay it in full). Then all of that freed up money will go straight into retirement accounts.

As it turns out, spending much less than you earn this is the way to get rich.
should probably be
As it turns out, spending much less than you earn is the way to get rich.

I wanted to link this on facebook so I summarized the post even more by filtering down to what I see as the 6 most important sentences. Now it’s short enough that hopefully even my lazy friends will read it. Here it is in case anyone else wants to use it:

The standard advice is that life is hard and expensive, so you should keep your nose to the grindstone, clip coupons, save hard for your kids’ college educations, and save any tiny slice of your salary that remains into a 401(k) plan. Almost all of that is nonsense: Your current middle-class life is an exploding volcano of wastefulness. As it turns out, spending much less than you earn is the way to get rich. The ONLY way. If you can get 25 times your annual spending saved up and working for you, that is enough to live off – forever. Your attitude determines your lifetime wealth much more than your knowledge of financial nuts and bolts.

What a great day I picked to visit this blog for the first time! I clicked over from Get Rich Slowly this morning and found this post, which is a fabulous introduction. I’m hooked, and this will be one of the blogs I follow regularly from now on.

I’m newly-single, in my early 40’s with a pre-teen son. I have a good-paying corporate job that I don’t want to stay in any longer than necessary, very little saved (poor life decisions), and a pretty low condo mortgage. I’d like to send my son to college.

Although I wish I would have been more financially responsible when I was younger (“Your Money Or Your Life” didn’t quite sink in back in my 20’s), I’m still hoping to retire earlier than others in my situation. There are so many good examples now of people choosing to live more simply in order to focus on the things that matter, and so many of those people are sharing their ideas and practices. I like to believe that it’s never too late to get started (or re-started).

I agree with you that our thinking about money is much more important than our knowledge of it.

Our economy thrives on consumption (we are called consumers for a reason). We have been trained to think that consuming more is better. If we get that new shiny toy, we would be cooler. If we buy that big house, people will think we’ve got it made.

But consuming more doesn’t make us happier, at least not for long. So we chase more toys. We consume even more. We think that retirement is the Holy Grail that will finally make us happy. But we actually push ourselves further away from it with each wasteful purchase.

Thinking frugally may be uncomfortable at first, but it is the antidote to our twisted attitude about consumption. We’re either happy or we’re not. Money and consumption only amplify our feelings in that regard.

It sounds simple, yes. And there’s no need to fuss over all the latest money tips until the cows come home. It’s our thinking about money that matters here.

If you have an employer match for a 401k, you should definitely contribute enough to get the full match. That is free money. Otherwise, financial advisors generally consider the Roth IRA the best way to save because your investments grow and you never pay tax on your income. Can’t get better than that.

Dear MMM – wait a minute, a Hawaii visit announcement gets it’s own article, but a Seattle visit barely gets a mention in the footnotes? Surely there is a full article (or two) worth of lifestyle changing bad-ass goodness to be found in the great Emerald City?

Thank you Mrs. MMM. Mrs. Seattleite is a fan of NW Edible Life and the evening sounds like a blast, so we might be there, even though we might have to commit a couple of decidedly non-Mustachian moves (which I won’t admit to here) to swing it.

I think that it’s important to try to save for an early retirement. Just because you can retire doesn’t mean that you need to. However, people who have the assets to can retire when they can no longer work. Hope for the best and plan for the worst.

I put 30% to 35% of my net (37k) towards debt every pay period and I will start putting that toward my retirement in 2 years when the debt is gone.

I estimate my retirement needs to be 20k per year and I can count on the Canadian government to kick in 9k per year. Using your 25 year formula I would need to save 275k to retire. As a late 40s person I am in big trouble but at least I have a number to work towards.

I share MMM’s values and goals, but I think that he fails to see that for some people, doing all of the above will not lead to financial independence at such an early age. Mostly this is because of poor decisions earlier in life (e.g. borrowing too much money for a grad/law degree), or the lack of skill set (like engineering) that provides for high income in your 20s. Yes, it worked for him and that’s great, but reality is that for many (most?) Americans “Mustacianism” is necessary for a “normalish” retirement age. Yes, the crap people buy doesn’t make them happy, but that doesn’t mean it will lead everyone to retirement at 30. It’s your blog and I’m a fan, but I think that it would be better if this reality for others was in the back of your mind .

You’re right, Reality.. sorta. If someone can really learn to live on 50% of their take-home pay – even if that is $30k or any other number – they will still be financially independent in 17 years. If they can live on 25% of whatever income, independence still arrives after 7.

But I acknowledge that not everyone is ready to make such changes. If you choose to have multiple kids in your 20s, for example, it becomes much more difficult to live on, say, $10k/year. On the other hand, a $100k family could certainly maintain a 50% or more savings rate, even with a pretty spendy middle-class-style life.

But most important of all: these changes are not just about early retirement. They make your life better even if you are in debt, or if you are decades from retirement, or if you never want to retire at all. Riding a bike is ALWAYS better than puttering down to the Target 2 miles away by car. Forcing yourself to experience entertainment other than TV is also a great and healthy change to your system. Even with enough savings to go back to a full ultraconsumer lifestyle nowadays, I do none of it, because the Mustachian lifestyle is so much more satisfying.

While your blog is not written for me – I’m in my 50’s – and have enough money to quit working, I don’t have enough money to quit working and fund my own healthcare. Don’t forget if I don’t have healthcare and get sick and go to just the hospital’s emergency room as an indigent and don’t have my assets hidden, the healthcare providers will come for them if I don’t pay the bill.

Second, I know you’re not a financial expert, but in these times of low interest rates and coordinated monetary debasement, see Jim Rickards and currency wars for details, inflation is a great concern to those trying to be rent seekers.

Third, maybe where you live, it’s a bike riders paradise, but in most parts of the country, you’re safer on a motorcycle, provided of course, you wear all the protective gear, than a bicycle. And that’s coming from some one who used to bike 100’s of miles a week when younger. I used to routinely get stuff thrown at me from vehicles and attacked by large dogs back in the 80’s – only forced off the road once, however. I can’t imagine what it’s like now. Well, actually I can, because one of my cousins, up until last year, used to bike on public roads in a Philly suburb. He still bikes, but drives his car to get to his preferred riding places because he got hit twice by cars in the last two years.

Still, living well under one’s means is the best living you can do, so I applaud you for taking the effort to wake others up to this lifestyle.

I have used frugality to enable me to work part-time and didn’t start off with the greatest circumstances. My family and I have been doing well on my single 2/3 salary for the last seven years. The skills I have learned and the life that I lead mean that in addition to being able to work part-time, I am also able to retire at 50…much earlier than most of my co-workers.

good for you…MMM puts a happy and positive spin on all this but long-term corporate job security is truly history so stashing as much as possible is just smart as your job will change and may disappear before you can retire (the old way)…it is a race with corporate greed and one YOU need to win….have you noticed that it takes about 5 years of gross overpayment for the CEO to hit his fu number and then he usually does….after “enhancing shareholder value” on his options…LOL…good luck on your seven year goal…..hope you hit it. best.

This is exactly what we are trying to do. I think our savings rate is about 40-50%.
Right now apart from 401k, our savings are going straight into down payment fund. once we buy a house, we will max out retirement accounts, and start contributing to a taxable account.
Our biggest expense is food for us.

I discovered this website recently, and from reading the posts see I am very much in like minded company, like preaching to the choir. I’m still trying to figure out what makes us different from the rest of the population, who can’t seem to save much money even if they make a good salary. We’re a very small percentage of the population. Do we just have more common sense than the average person, or is there more to it than that? Even as a teenager, I couldn’t understand having to work more to get excess junk I don’t need or for status symbols. Illustrating case in point, when I was 14 years old in 1975 I asked some adults why anyone would want some big, expensive fuel guzzling car like a Lincoln Continental (keep in mind the energy crisis from the Saudi Arabia oil embargo was only a year ago). The reply I got was that it’s a status symbol. I was totally puzzled, befuddled, baffled back then and to this day still don’t quite get it. At that time I thought I would rather have a cheaper car like a Ford Maverick and have more time to enjoy driving it (or being mustachian ride my bike more) , and still think that way.

Now let’s look at the average non mustachian. I remember reading about some scientist who did an experiment where he successfully got some ants to follow each other in a circle around the rim of a flower pot. Do most people really want all that stuff, all that status and conspicuous consumption, or are they like those ants following each other? As I try to put what has puzzled me for a lifetime into 2 short paragraphs, any comments or thoughts?

I’m neither a sociologist, nor an evolutionary biologist, but I think yes, they really do want that conspicuous consumption and status – (males at least) for reproductive advantages.
There are bird species where the females pick mates based on the quality of nest the male builds. An inferior nest is more prone to failure in adverse weather or prone to predators due to poor location. She is interested in protecting the eggs until the babies are capable of independent life. She wants the best nest she can find.
We don’t build nests, but successful child rearing is resource intensive. Many females are searching for a mate that can provide the resources necessary for child rearing. Many males want to display their abundant resources (through cars, bling, clothes, etc.) to attract high quality mates. For most of human history, resources could only be obtained by ones own work or skills (food stores, furs, tools, etc).
Only very, very, very recently (less than 200 years), have people been able to display resources they didn’t acquire through their own labor or ingenuity – they were able to go to a bank, and borrow resources to buy stuff. They display to the world that they have resources by driving a Lexus, but they are resource poor – usually broke. I don’t believe that evolution has had a chance to catch up with modern banking.

Good answers. I especially think you’re right that evolution hasn’t caught up to anywhere near the realities of the modern world. The idea of a mate being drawn to whoever has the most stuff made sense in a world where 1) there wasn’t the mass affluence there is nowadays when even a person who can only sensibly afford a modest house and car can still provide for children, and 2) people didn’t live as long, so the consequences of a choice of mate that can provide, but you don’t really get along with that well wasn’t as much of a problem. Nowadays, with people living longer and changing through their lives more as the world changes, it’s FAR more important to have a mate you really get along well with than one that’s less suitable but has more money. If I had a penny for every time a couple didn’t realize this idea and payed for it later, I wouldn’t need to be mustachian as I would be a multi millionaire.

It also appears evolution doesn’t give most people the ability to understand that the person who lives below their means may be a better provider, as they will have the money available for when a kid says: I need money for a post secondary school education, or other things they may need.

Your evolutionary explanation makes sense. It worked the other way round for my hubby and me though. When we met he was 27 and still lived with his parents. After we’d been going out for a few months, he confided that he was saving up so he could retire at 50. I knew then that he was my soulmate as we saw things the same way. Why would anyone risk raising kids with someone who throws money away?

The scientist you were thinking of is J Henri Fabre, and it was pine processionary caterpillars. He is considered the father of modern entomolgy. Almost all the work he did that he is remembered for (really the most important work of his life) was done after he retired.

Another amazing post. Thank you MMM for all the useful advice and entertaining posts to read. I’m moving to a smaller, cheaper home that is a 15 minute walk to my job and I couldn’t be happier thanks to you.

Can you write an article on how following your philosophy helps the environment by reducing a person’s carbon foot print and the resources they use? I think too often people think they are “environmentalists” because they recycle and drive hybrid vehicles but following your tips are way better for our planet than those approaches.

As it turns out, my wife and I have been living a “Mustachian” existence for the last 10 years. When we met, she already had a very manageable mortgage and immediately we were saving about 50% of our monthly take home pay. As the mortgage has gotten smaller (now $275 monthly) and our salaries have increased we are currently saving 75% of our income. Good salaries are a factor in the savings rate, but we also must possess a “frugality gene” as well – we are able to live quite easily on $2000 – $2500 monthly in Canada’s most expensive city – we are both 40 years old.

Savings and investments have reached a point where we can now make some big changes in our lives. Likely, I will quit my “meat-grinder” career, take a lengthy break, get healthy (physically and mentally) and decide if I want to work again. I like MMM’s idea of doing things that he is happy doing, regardless of money – and quite frankly, we don’t need two incomes anymore. Investment income can pretty much cover half my salary now anyway.

My wife is lucky in that she loves her job and is compensated very well – she has made it clear to me that she intends to work another ten years, at which point she may join me in “retirement” or whatever we settled on calling it. ;) Whether or not I am “retired” or a “kept man” while my wife still works for another ten years is something I am not concerned with in the slightest.

MMM, I think you should think about writing a book – your approach is much more accessible than was Jacob’s ERE… I found his book a slog to get through….

Anyway, continue the great work MMM…. I will continue to mostly “lurk” about this site, but I may chime in from time to time.

Just a question for MMM… Or a comment… Whatever. You must have friends who are not “on board” or embracing the life that you are enjoying. Then, with such differences in lifestyles and values, how do you maintain those friendships? This is where I struggle. I associate with very different peer groups. Those that I work with are heavy consumerists with high incomes; find it difficult to relate to them with my much lower salary and more minimal lifestyle. Then I have another peer group who we socialize with in our community, and, to generalize, they are also heavy consumerists but with high debt. Sometimes, finding common ground with either group is hard. And we don’t watch much tv. Yes, there’s more to life than money, shopping and tv, but the rest of the world seems to find that hard to grasp, and don’t have much else to talk about.

I can’t speak for MMM but it is possible to find some new friends who you’ll very much enjoy that either live or admire your frugal livestyle. It takes some time but you’ll end up with like-minded people if you look. Or maybe you’ll convert some of your friends – not by preaching to them but by living this life -maybe they’ll ask you about it. If they give you hard time, just smile. It’s a choice though, you may choose to hang with your current spendy friends (I still have some who do not influence me) or you’ve got the option for new acquaintances. Maybe thru this forum!

I’ve been struggling with the same thing recently. The trouble is that all the answers I have heard to this issue are some variation on the “find new friends” theme in Melissa’s answer. I have a few lifelong friends who don’t identify with either my income level (higher) or my spending level (lower). I don’t have trouble relating to them, but it’s hard to spend much time around them when they all like doing spendy things. Finding new friends is not an answer to “how do I maintain those friendships.”

In my family we have both the super skin flints to super consumers. and I think it’s really a matter of attitude. My sisters in law represent the two extremes, both have the first set of grandkids, one spent nothing on them, the other went nuts with shopping, so much that the parents are struggling to find room for everything. They’ve also gone to the states for shopping weekends, the one spends a fortune, the other spends nothing.

We my wife and I live in the middle. We do a lot of traveling with our spending sister in law and she goes nuts on every vacation while we stick to our budget. When she complains about the bills when we get home we discuss but don’t push. For the first few years it was all CC, now she saves up and pays it all cash.

Why, because we talk about it, encourage but never push or preach.

If your friends want to spend loads of money let them enjoy it. If you only want super frugal friends you’ll be very lonely in life.

Finally don’t do what one set of friends do. We live in a coffee culture (Spain) and often meeting friends means a coffee and a toast, when I meet them they will gladly sit there while I order breakfast (2-3€) and drink water. That drives me mad because I feel obligated to pay.Surely they can afford a Euro for a coffee, it’s not frugal but cheap. She once went out for a ladies night out and while 15 other ladies order dinner she simply drank water. Drove everybody mad. Either cancel or budget a bit of money in for dinner.

I have another friend with 4 teenagers and he comment they don’t eat out anymore because it’s too expensive. I understand and occasionally we have coffee together.

You should! I did and I am going to go through each and everyone of them again. I am more confident than ever that early retirement is going to happen for us…because we will make it happen. All the power to ya!

This all reminds me of Malcolm Gladwell’s book “Outliers”. I cannot imagine you have not read it, but if not….it’s a winner.

What I am about to write does not insinuate in any way, shape, or form that there was luck involved with you going zero to hero. But you chose to start writing about your lifestyle and values at one of the most incredibly important times in our nation’s history. All of us (me especially) scampered around for answers when our over inflated lives came crashing down. Credit cards were maxed, home values plummeted, etc. We needed answers, and the most obvious was the life you were living.

What once seemed “weird” (frugality) now is paramount to living a happy life. You chose to write about it (damn awesome writing btw) and we all chose to read over and over.

We hang with very different people than we did a few years ago. IT is incredible. I am STILL trying to get pumped for the bike thing…it’s tough, man. It’s a traffic thing (safety)…I’ll get over it.

Been following for a couple weeks now, and have read the vast majority of the material you have written. Really a very good job, and something hopefully many will be able to use in their lives for maximizing their enjoyment in life and
making their funds stretch a long time, perhaps to their life’s end.
I am definitely one of your older readers at 60, but what you write is really applicable to all adult age groups as well as youngsters.
My wife and I were in New Zealand in 2006, and it was pretty eye opening to see how many of the residents of this great country maximize their resources, and don’t waste like we do. Our hosts were quite well off but still were quite frugal and cost conscious in their everyday life, and enjoyed many activities that were free or nearly free.
For me it is a balancing act. Living the “good life” on less and yet still not depriving my wife and I many of the great things to be enjoyed in life.
My dad who died over ten years ago taught us the importance of living each day to the fullest as one never knows what tomorrow will bring. It’s a lesson I have tried to instill into my now two grown “kids”.
It’s a lesson we all should have learned a long time ago, but somehow we got off the track, in the American fashion.
Look forward to more good stuff from you and Mrs. M.

Congrats on leaving the rat race. My dream is to sail around the world but the girlfriend gets seasick, so not an option. What’s the land equivalent of sailing on the water? I’d love to get around cheaply without having to pay for all that gas.

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